GILLETTE, Wyo. (AP) - Citing a dramatic increase in industry activity, the president of the Petroleum Association of Wyoming is touting a budding rebound for Wyoming’s oil industry, especially for the Powder River Basin in the northeast part of the state.
“There’s been quite a bit of activity this year,” Bruce Hinchey said. “I’d say we’re looking pretty good compared to last year.”
Following a 12 percent decline in oil production in the first quarter of the year compared to 2016, Hinchey said producers are starting to pump more and are ramping up for a busy summer.
In all of 2016, 11 rigs operated in the state. So far through June this year, 25 rigs have been reported operating, and many of those are in northeast Wyoming, he said.
“A lot of those are exploring in the Powder River Basin, and a majority of those are oil wells exploring in the Powder River Basin and down into Cheyenne,” Hinchey told the Gillette News Record (https://bit.ly/2sXMwMB).
Applications for opening up new wells are up 43 percent so far, an indication that the state’s rig count is likely to increase as the year progresses, he said.
But not everyone is as optimistic as Hinchey.
“I think for the short term, we are looking a little better, but not for the long term,” said Patrick Hladky, president of Gillette-based Cyclone Drilling. “I think this is short-lived with the price of oil dictating activity.”
While the rig count and well application numbers may be a good sign, those don’t make up for oil prices that continue to slump below $50 a barrel. That includes several straight weeks of closing in the low- to mid-$40 range, Hladky said.
“I don’t know what oil prices will do, but they’re trending downward again,” he said. “With oil trending down since April, we’ll see the momentum we’ve gained from the first part of the year slow down quite a bit or stop.”
Robert Godby, an economist and director of the University of Wyoming Department of Economics and Finance, said there’s reason for Hinchey to be encouraged but there’s also equal reason for companies like Cyclone Drilling to be hedging.
“There is some exploration going on,” Godby said.
But he noted that some companies are contracting for rigs more to take advantage of service companies like Cyclone Drilling that have reduced their prices in response to the weak market.
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Information from: The Gillette (Wyo.) News Record, https://www.gillettenewsrecord.com
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